The lecture also presented the positive macroeconomic effects from infrastructure investments, which are sizeable. Raising infrastructure investment by 1% of GDP for 10 years can increase GDP up to 2.5% at the end of the 10 year horizon.

However, achieving those benefits will require policies that can help countries to select the best projects. Surveys in participating countries in the form of Public Investment Management Assessments indicate significant scope for improving infrastructure governance in CESEE (see graph 2). Focusing on the role of infrastructure governance to ensure spending efficiency, stimulate more cross-border collaboration and greater private sector participation are therefore crucial. The current crisis may present an opportunity to enhance long-term resiliency by shifting growth towards green and digital infrastructure.

Graph 2 IMF Public Investment Management Assessments (PIMA)

In the discussion the authors pointed out that there are large variations in the effectiveness of public investment management across the region. The importance of cross-border cooperation was mentioned as well as the related challenges.

Elisabeth Hagen, Senior Research Associate, Vienna Institute for International Economic Studies